Renewable energy plays an important role in distributed energy resources in smart grid systems. Deployment and integration of renewable energy resources require an intelligent management to optimize their usage in the current power grid. In this paper, we establish a game-theoretic framework for modeling the strategic behavior of buses that are connected to renewable energy resources and study the equilibrium distributed power generation at each bus. Our framework takes a cross-layer approach, taking into account the economic factors as well as system stability issues at each bus. We propose an iterative algorithm to compute Nash equilibrium solutions based on a sequence of linearized games. Simulations and numerical examples are used to illustrate the algorithm and corroborate the results.